Construction deepens selling pressures

BUILDING PRESSURE:：New Taipei City, Taoyuan and Hsinchu could undergo market corrections given the US$100 billion-plus new housing volumes posted last quarter

By Crystal Hsu / Staff reporter

Mon, Nov 04, 2013 - Page 13

New construction projects totaled NT$372.3 billion (US$12.63 billion) last quarter, up 32.2 percent from the same period last year and 5.3 percent from three months earlier, deepening selling pressures in areas with heavy supply, a report by Cathay Real Estate Development Co (國泰建設) and National Chengchi University’s Taiwan Real Estate Research Center (台灣房地產中心) showed.

The nation’s developers and builders launched 24,344 housing units in the market during the July-to-September period, rising 43.4 percent year-on-year ago and 25.9 percent from the preceding quarter, as the shadow of the special sales levy continued to fade away, the report said.

The high construction volume occurred even though the government indicated plans to tighten the special sales levy, better known as the luxury tax, and the central bank has warned of likely interest rate hikes at home and abroad as the global economy recovers.

New housing in New Taipei City (新北市), and in Taoyuan and Hsinchu combined, broke through the NT$100 billion mark to NT$136.4 billion and NT$102.2 billion respectively last quarter, picking up for the sixth consecutive quarter, the report found.

“Those areas have accumulated large supply and may create selling pressure” once downside risks materialize, the survey leader and Hsuan Chuang University finance and banking professor Hua Ching-chun (花敬群) said, referring to the tapering of the US quantitative easing (QE) and domestic interest rate hikes.

Already, the fall sales season — spanning mid-September to late last month — fared weaker than expected, the report said.

The Chinese-language Housing Monthly (住展雜誌) echoed the observation, saying in a separate report that developers and builders postponed 25 percent of new projects for the promotion period on concerns over policy uncertainty and the standoff between the executive and legislative branches.

The delay drove the magazine to cut its forecast by 10 percent for new construction projects this year to NT$1.1 trillion, down from NT$1.2 trillion, as the QE issue would continue to weigh down the sector, the monthly said.

Last quarter, mainstream products averaged NT$16.47 million with apartment buildings accounting for 91 percent of new construction, according to the Cathay report.

“The market should watch out for potential corrections in New Taipei City, Taoyuan and Hsinchu, given their large supply,” Hua said.

New construction volume held relatively steady last quarter in Taipei, where builders introduced 934 new housing units valued at NT$53.2 billion, the quarterly report indicated.

Greater Taichung saw new construction volume grow 57.4 percent from a year earlier and 25.9 percent from the previous quarter, while Greater Kaohsiung stayed in expansion mode, it said.

Greater Tainan reported a decline in both housing units and sales, dragged by listless sales of high-end and middle-priced products, the report said.